2022 is on track to be the slowest year for IPOs in over a decade, but history has shown us that challenging markets often set the stage for broad outperformance. Which IPOs performed the best during past market slowdowns, and could they provide insight on what to expect when the window reopens?
In the past two decades, IPO issuance sank to these levels of inactivity twice. In the wake of the dot-com bubble, the Nasdaq declined 78% from peak to trough, dampening IPO activity for about three years. During the financial crisis, the Nasdaq declined 56% from peak to trough, this time shutting the IPO window for nearly two years.
In each case, activity normalized after the Nasdaq rallied 45-55% from the bottom. The recovery period also saw new issuers produce strong aftermarket returns, and the percentage of IPOs trading above issue at year-end...
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